Business

Chris Cantell Discusses Business: Dealing with recession reality
by Magdalena Rosova

More than &4 trillion American dollars that the government has spent at the financial crisis may get worse as economic reality sets in.

Although there are some positive signs that efforts to help market to revive are beginning to work, companies are not horrified with the damage done to their profits.

Companies are reporting low earnings. Japanese Sony selling cameras and televisions has fewer buyers and French Peugeot Citroen is planning a huge production cuts as a reaction on decrease in demand. E-commerce company Amazon.com warns that holiday sales won't be as strong as usually.

Investment bank Lehman Brothers collapsed five weeks ago and lost &12 trillion in wealth. Since the bankruptcy, stock markets have fallen sharply, which negatively affected consumer and business confidence. That will definitely influence the Federal Reserve's decision on whether to cut short-term borrowing costs or not.

Fortunately, the Fed succeeded a bit in easing the credit market tense. For the first time since Lehman collapsed lending rates have begun to ease and bank borrowings from the Fed have gone down. However, the damage has already happened. A way to economic recovery is very long.

In April, analysts predicted a 64 percent jump. Since that forecasts have come down. Economist Bruce Kasman say that things can get even worse.

Companies scared by the crisis are responding by cutting their spending and jobs, which effects consumer spendings and creates a circle that is hard to break.

The economic recession of American economy impacts the global growth. Until the economy get revived, stocks markets may experience some more unpleasant shocks.



related story: http://www.guardian.co.uk/business/2008/oct/17/useconomy-creditcrunch

by Magdalena Rosova for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova

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posted by Blog TechSource @ 2:11 AM